Telangana RERA Orders Refund To Homebuyers Association For Non-completion Of The Project Within Promised Time

Background Facts

On 31.01.2020, Builder (builder) entered into a Development Agreement with Respondent No.2. According to this agreement, builder agreed to construct a multistoried residential complex on the project land, including a cellar, stilt floor, five typical upper floors, and various amenities.

The agreement specified that construction should be completed within 24 months, with a grace period of six months from the final approval date of the plans by competent authorities.

Following this agreement, Builder executed several unregistered sale agreements from 2019 onwards and applied for Hyderabad Metropolitan Development Authority (HMDA) permission on 18.03.2020. HMDA granted approval on 13.02.2021 for the construction. Further, Builder applied for project registration, which was denied by the authority.

The Complainants (Homebuyers association) contended that Builder entered into 249 sale agreements with their members. Out of these, 14 were canceled, 62 made partial payments up to 30 lakhs, and 174 made partial or full payments exceeding 30 lakhs.

Despite the agreements, the Complainant Association alleged that construction had not started or been completed as per the HMDA plan. Despite multiple attempts to contact Builder, there was no positive outcome.

Further Complainants mentioned news reports of fraud by Builder's Managing Director, who was arrested for siphoning Rs. 1100 crores from this and other projects.

Feeling aggrieved, the Complainants filed a complaint before the authority, seeking either the completion of construction and handover of their flats or a refund of their payments with interest.

Observation and direction by Authority

Authority referred the findings done by Engineering Staff College of India which was appointed by authority as investigating body for conducting comprehensive evaluation of the project.

The investigation body report mentioned that present stage of work is at the excavation stage with little basement work in only H Block and no work progress at all in G Block, F Block and amenities Block of the project.

Therefore, authority held that It is clear from finding that the construction could not be concluded within the stipulated timeframe as committed in the respective Agreements of Sale.

Further, the authority found the builder's actions to be a serious breach of trust and a violation of the Act, 2016, and held that the homebuyers, who invested their hard-earned money, have suffered significant financial and emotional distress. Therefore, the complainants are entitled to receive a refund from the builder with interest at 10.85% per annum.

Additionally, the authority held that the builder is liable to be prosecuted under Section 80 of RERA, which stipulates the cognizance of the act. The authority also directed the Additional Registrar to initiate prosecution before the concerned Metropolitan Magistrate against the builder.

Case – Sri Katakam Santosh Versus M/s Sahiti Infratec Ventures India Pvt. Ltd. & others A/W 4 others

Citation - COMPLAINT NO.647 OF 2022 A/W 4 others

Click Here To Read/Download Order